The report states that accession to the EU remains in the forefront of Poland's economic and political goals and that much of the ongoing reform process is being driven by this objective. The report notes however that vigorous pursuit of multilateral trade liberalization would benefit Poland's long-term economic interest.

The new WTO Secretariat report, along with a policy statement by the Polish government, will serve as a basis for the trade policy review of Poland which will take place on 3 and 5 July in the WTO Trade Policy Review Body.

While Poland maintains a multi-stranded approach combining multilateral, regional and bilateral initiatives, trade liberalization in Poland has recently been largely concentrated at the regional level, the report says. The European Union (EU) - replacing the former COMECON area as Poland's main trading partner - accounts for around two-thirds of total merchandise exports and imports. Preferential access for EU products is provided under the Europe Agreement, whereby tariffs were eliminated on all industrial goods from 1999, except steel and petroleum products, abolished from 2000, and automobiles, which will be removed from 2002. Special arrangements apply to agricultural products.

The report notes that the impact on net trade creation of Poland's possible EU accession is not completely clear. While Polish most-favoured-nation (MFN) tariffs would fall on average by almost two-thirds (based on 1999 levels) following adoption of the EU's Common External Tariff, agricultural assistance is likely to increase significantly.

Poland also has free-trade agreements with the European Free Trade Association (EFTA), other Central European Free Trade Agreement (CEFTA) parties as well as bilaterally with the Baltic States, Turkey and Israel. Preferential tariffs differ substantially between trading partners, and in 1999 were, on average, less than half of Poland's MFN tariffs.

External trade is vital to the transformation of the Polish economy, the report says. Increased access to competitive imports following trade liberalization has facilitated Poland's export-led growth. The share of merchandise trade (exports and imports) to GDP increased from 38% in 1994 to 49% in 1997, before falling to 44% in 1999. Manufactured products account for over three quarters of Polish trade and export shares of these goods increased from 59% in 1992 to 77% in 1998.

The report notes however that import growth exceeded export growth throughout the 1990s, and that exports, hit hard by developments in Russia, contracted by 11% in 1999. As a result, Poland's trade and current account deficits widened considerably, approaching 9% of GDP in 1999.

Poland's MFN tariffs averaged 15.9% (unweighted) in 1999, compared with 6% on imports from the EU and other preferential sources. Much higher tariffs, averaging 34.6%, apply to imports from non-WTO countries. The report notes that substantial tariff dispersion exists: MFN rates range from zero to 293%. The report also notes that high tariff escalation exists on food, beverages and tobacco, textile and leather, and wood and wood products. The report states that the existence of many different MFN rates, often involving gradation at the one-decimal-point level, as well as numerous preferential rates, complicated and reduces the transparency of the tariff structure.

The report says that agricultural assistance continues to be a high priority in Poland. Agricultural support almost doubled from 12% in 1991-93 to 23% in 1997-99. This, the report notes, has assisted farmers, mainly at the expense of consumers, and has probably affected economic efficiency. Food prices, on average, were 27% above world levels in 1999. Farm assistance is delivered by tariffs, price support, supply control measures, credit and input subsidies as well as direct outlays, including export subsidies and deficiency payments recently introduced on wheat. The main products assisted include cereals, especially wheat and rye, pigmeat, eggs, sugar, poultry and oilseeds. Tariff quotas introduced by Poland under tariffication have been consistently under-utilized.

Industry restructuring in Poland is continuing, facilitated by reduced manufacturing assistance and trade liberalization, especially allowing competition from EU exporters. The report notes that impressive progress has been achieved in privatization of state-owned enterprises and in attracting foreign investment. Nevertheless, state-owned enterprises remain significant in some key sectors, such as hard-coal mining, steel, chemicals, shipbuilding, electricity generation, sugar, liquor, railway transport, and defence industries. Since 1998, the government has accelerated privatization efforts and aims at divesting 70% of remaining States assets by 2001.

In the services sector, the report notes that Poland is taking substantive privatization and de-regulation steps. The de facto state monopoly on long-distance and local telephone calls was terminated from 1999 and the statutory monopoly on international calls and mobile satellite services is to end from 2003. The digital phone market is already open. In the financial sector, bank privatization has accelerated since 1997, aided by substantial foreign participation. Entry restrictions on foreign banks and insurance companies, including operation of branches, have been removed, subject to enhanced prudential requirements.

Poland was committed to introduce the provisions of the Trade-Related Intellectual Property Rights (TRIPS) Agreement by 2000, and under the Europe Agreement, to providing intellectual protection and enforcement similar to the EU. The report notes that according to the authorities, Poland has had patent, trademark and copyright legislation broadly consistent with international standards for some time, and has strengthened such protection by introducing new legislation, such as on copyright in 1999. The report notes however that more effective enforcement of intellectual property rights remains a major challenge. The incidence of imported pirated and counterfeit products in Poland appears to be substantial.

Notes to Editors

Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals. Significant developments which may have an impact on the global trading system are also monitored. For each review, two documents are prepared: a policy statement by the government of the member under review, and a detailed report written independently by the WTO Secretariat. These two documents are then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These documents and the proceedings of the TPRB’s meetings are published shortly afterwards. Since 1995, when the WTO came into force, services and trade-related aspects of intellectual property rights have also been covered.

For this review, the WTO’s Secretariat report, together with the policy statement prepared by Poland, will be discussed by the Trade Policy Review Body on 3 and 5 July 2000. The Secretariat report covers the development of all aspects of Poland's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector.

Attached to this press release is a summary of the observations in the Secretariat report and parts of the government's policy statement. The Secretariat report and the government’s policy statement are available for the press in the newsroom of the WTO internet site (www.wto.org). These two documents and the minutes of the TPRB’s discussion and the Chairman’s summing up, will be published in hardback in due course and will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992 and 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), Côte d’Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995 and 1997), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993 and 2000), Korea, Rep. of (1992 and 1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993), Poland (1993), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

The Secretariat’s report: summary  Back to top

TRADE POLICY REVIEW BODY: POLAND
Report by the Secretariat – Summary Observations

The Republic of Poland continues to successfully pursue its rapid transformation to a market economy. Led by major trade and other comprehensive economic reforms, and based on strong private sector development, the Polish economy has performed robustly. Impressive growth rates since the early 1990s have raised real GDP to one quarter above pre-transition levels. GDP per capita averaged US$4,000 in 1999. Social indicators have also improved substantially. Nevertheless, rural poverty and regional development remain key problems.

Restoration of macroeconomic balances and radical restructuring of the economy have greatly contributed to Poland’s economic prosperity. The private sector now accounts for some three quarters of output. Foreign investment has accelerated and added to growth.

Recent Economic Performance and Outlook

The Polish economy has shown resilience to external factors. Despite an initial deep recession, the economy rebounded quickly with faster growth from 1992. Pre-transition real GDP was achieved by 1995, and subsequently growth has averaged around 5% a year. Slower growth of 4% in 1998-99, due mainly to the Russian financial crisis and the slowdown of the German economy, appears temporary, with prospects again promising following successful stabilization policies to control the contagion effects of these external developments. Growth is expected to accelerate in 2000 and 2001 to around 5% and 6%, respectively, based on resumed double-digit export growth.

Prudent stabilization polices have been an important part of Poland’s success. However, the fiscal deficit, which had fallen to 1.3% of GDP in 1997, recently rose to 3-4% of GDP. The budget deficit is projected to again fall in 2000, to about 2% of GDP. Inflation, although remaining relatively high, fell to 7% in 1999, but may rise in the short term, partly due to excise and VAT increases. High interest rates were reduced from 24% in early 1998 to 13% in early 1999 as the economy slowed. They were again raised in September 1999 in response to a quickening of the economy and rising inflationary pressures.

The exchange rate was partially liberalized in 1991 when the fixed rate was replaced with a crawling-peg system, pegging the rate to an Euro/U.S. dollar currency basket. From March 1999, the monthly rate of crawl was slowed to 0.3% and the margins widened to ± 15%. Significant capital inflows – encouraged by high domestic interest rates – and relatively high Polish inflation rates led, until late 1999, to a substantial real appreciation of the zloty, weakening external competitiveness.

Poland's trade and current account deficits have widened considerably, approaching 9% of GDP in 1999. Import growth exceeded export growth during the 1990s, and exports, hit hard by developments in Russia, contracted by 11% in 1999. Such deficits reflect imbalances between domestic savings and investment. Poland has a healthy capital account, buoyed by strong private investment inflows. These have effectively financed Poland’s current account deficits without raising public foreign indebtedness. External reserves provide import cover of six to eight months. External debt, assisted by international debt restructuring deals, fell from 37% of GDP in 1995 to 27% in 1999.

External trade is vital to the transformation of the Polish economy. Increased access to competitive imports following trade liberalization has facilitated export-led growth. The share of merchandise trade (exports and imports) to GDP increased from 38% in 1994 to 49% in 1997, before falling to 44% in 1999. The European Union (EU) has replaced the former COMECON area as Poland’s main trading partner, accounting for around two thirds of total merchandise exports and imports. Manufactured products account for over three quarters of Polish trade. Export shares of these goods increased from 59% in 1992 to 77% in 1998. Within manufacturing, the export share of iron and steel and chemicals has fallen, while that of machinery, transport equipment, and consumer goods has risen significantly.

Trade Policy Objectives

The main objective of Poland's trade policies is, overall, geared towards increased liberalization. Poland maintains a multi-stranded approach combining multilateral, regional and bilateral initiatives.

Poland is a founding member of the WTO and grants at least most-favoured-nation (MFN) treatment to all WTO Members. It is an observer to the plurilateral Agreement on Government Procurement. In the context of the Uruguay Round, Poland bound its agricultural tariff and almost all industrial tariffs; tariffs on products covered by the Information Technology Agreement (ITA) are to be phased to zero by 2002. Also, as part of its Uruguay Round commitments, all non-tariff measures, including variable levies, were converted into tariffs albeit at high rates, and minimum market access was provided by tariff quotas on agricultural products, including beef, pork, poultry meat, milk, and certain fruit and vegetables. Poland extended its initial GATS commitments on services through its participation in the WTO Agreements on basic telecommunication services and financial services, although it is still to ratify the Fifth Protocol.

Trade liberalization in Poland has recently been largely concentrated at the regional level. Preferential tariff cuts within regional trading arrangements have exceeded multilateral reductions. Preferential access for EU products is provided under the Europe Agreement, whereby tariffs were eliminated on all industrial goods from 1999, except steel, and petroleum products, abolished from 2000, and automobiles, which are to be removed from 2002. Special arrangements apply to agricultural products. Poland also has free-trade agreements with EFTA member States, other CEFTA parties as well as bilaterally with the Baltic States, Turkey, and Israel. Preferential tariffs differ substantially between trading partners, and in 1999 were, on average, less than half of Poland’s MFN tariffs.

Following OECD membership in 1996, and the commencement of EU accession talks in March 1998, Poland’s reforms are being driven largely by the objective of joining the EU by 2003. This goal is significantly influencing Poland’s economic and trade-related policies, which are now being harmonized with those of the EU. This requires comprehensive changes to institutional arrangements as well as enactment of new laws and regulations to achieve coherence with the EU’s acquis communautaire.

Poland is already well integrated within Europe, especially the EU, and this would clearly intensify following accession. EU talks are well advanced in many areas. Poland adopted a revised National Programme of Preparation for Membership in the EU in May 1999, and screening of its legislation for compatibility with EU law was completed by November 1999. Negotiations, however, are still pending in several important areas, such as agriculture, environment, and movement of people.

The impact on net trade creation of Poland’s possible EU accession is not completely clear. While Polish MFN tariffs would fall by almost two thirds (based on 1999 levels) following adoption of the EU’s Common External Tariff, agricultural assistance is likely to increase significantly. Further, the widening sectoral disparities in assistance between manufacturing and agriculture might hamper the efficient allocation of resources in Poland.

Further integration with the EU should accelerate Poland’s economic development and provide renewed opportunities and impetus for more comprehensive trade, investment, and other economic reforms. The extension of regional trade preferences on a non-discriminatory basis and securing them in the multilateral framework should maximize the benefits to Poland from trade liberalization.

Poland’s GSP scheme exempts many products, such as textiles, from preferential treatment. On average, preferential tariff margins on imports from developing and least-developed countries are limited; generally these countries receive less favourable access than Poland’s regional trading partners.

Trade and Related Policy Measures

Poland's MFN tariffs averaged 15.9% (unweighted) in 1999, compared with 6% on imports from the EU and other preferential sources; 14.1% on imports from developing countries; and 9.9% from least developed country suppliers. Much higher tariffs, averaging 34.6%, apply to imports from non-WTO countries. The tariff surcharge, introduced on all imports for balance-of-payments reasons in 1994, was progressively lowered from 6% to 3% and abolished as from 1997.

Substantial tariff dispersion exists. MFN rates range from zero to 293%, with a standard deviation of 24 percentage points. High tariff escalation exists on food, beverages and tobacco; textile and leather; and wood and wood products. Tariff transparency is improved by the high incidence (over 90%) of ad valorem tariff rates. However, the existence of many different MFN rates, often involving gradation at the one-decimal-point level, as well as numerous preferential rates, complicates and reduces the transparency of the tariff structure.

Almost 94% of Poland's tariff lines are bound. Poland adopted ceiling bindings for many products, exceeding, on average, MFN applied rates in 1999 by 25%, and by almost 66% on agricultural products. This gap provides scope to raise duties in the future, but affects the predictability of the tariff system. Poland recently used this leeway to substantially raise applied tariffs, to bound levels, on a range of agricultural products, such as wheat, butter, sugar, rapeseed, and pigmeat.

Customs clearance fees are generally ad valorem, not linked to the services provided. Some fees were eliminated in June 1999; the rest will be removed by 2001, except for those maintained by the EU. VAT and excise taxes levied on some imports appear to be discriminatory with lower rates levied on domestic products, such as clothing, where local products are exempt from excise duties while imports are taxed at 20%.

The new Customs Code of 1997 and the Customs Services (Administration) Act of 1999 provide an important framework for improving customs administration. However, customs clearances still frequently involve long delays and there are suggestions of inconsistent treatment. A computerized system is being introduced, and customs control is to be based on risk analysis.

Most import bans and quotas, such as on petroleum products, have been removed. Poland prohibits imports of used passenger and commercial vehicles older than ten and six years, respectively, for health and environmental reasons. These are to be eliminated by 2002. Import licensing also applies to petroleum oils and gases; certain vehicle engines and other components for assembly; some food products; gelatine for industrial use; alcoholic beverages; and tobacco products.

Tariff quotas apply to a wide range of imports. "First come, first served" global tariff quotas were implemented in July 1995 on many agricultural imports as part of tariffication. Many of these quotas have been consistently and substantially underutilized. Poland has also applied bilateral tariff quotas on agricultural imports from regional trading partners. Tariff quotas, including on a bilateral basis, also apply to certain manufactured goods.

Poland maintains mandatory health and safety standards – the B certificate – on many products to protect consumer interests. Many Polish standards are not related to international norms. Although the list of products covered by mandatory B certification was halved in 1997, the requirement still applies to about one third of all goods marketed in Poland.

Of 18,000 Polish standards in 1999, some 75% complied with EU norms; 15% with international norms not adopted by the EU; and 10% were Polish-designed. Poland aims to have at least 80% of standards harmonized with EU norms by 2002, and to adopt EU requirements where different from international norms.

Poland maintains strict quarantine and other SPS regulations affecting food imports, such as live animals and related products, vegetables, and fruit. Poland has signed several bilateral agreements concerning SPS matters since 1992. New regulations, including labelling requirements apply to imports of genetically modified food since November 1999.

Poland has taken import contingency measures, including anti-dumping duties, import quotas and licensing requirements, on a range of products, such as steel, footwear, and chemicals. Although Poland's use of general safeguard measures has been limited, it has frequently invoked specific safeguard action, mainly on agricultural imports, under its WTO and bilateral agreements.

Various adjustment and regional assistance schemes provide financial assistance, such as grants, loans, tax concessions, and loan guarantees, to promote industry restructuring. Such arrangements have been applied in iron and steel, chemicals, transport, machinery, food processing, energy, construction, and pharmaceuticals. National price preferences of 20% apply to government procurement contracts for goods and services, including construction. Domestic suppliers must source at least 50% of raw materials or construction costs locally.

Poland maintains, at least intermittently, export quotas and bans, on a number of products, such as animal skins and hides as well as non-ferrous scrap, aimed at protecting domestic supplies. These assist downstream processors, such as footwear manufacturers, by lowering input prices below world levels. Poland also monitors certain steel exports to the EU to counteract, according to authorities, the threat of anti-dumping proceedings. Several Polish exporters are also party to price and volume undertakings on exports to the EU.

Export subsidies apply, including on sugar, potato starch and, in 1999, on pig carcasses. Subsidies totalled US$13.9 million in 1998. Poland’s WTO agricultural commitments permit it to extend export subsidies to additional products, such as animal products, meat, fruit, vegetables, rapeseed, and rapeseed oil.

Export insurance and guarantees are provided by the government-owned Export Credit Insurance Corporation. Export promotion and finance, including loans and loan guarantees, are also available. Poland has 17 special economic zones and eight foreign trade zones that provide incentives. The new Customs Code provides for duty drawback or suspension on imported inputs processed for export. Exporters also benefit from investment-related tax rebates that preferentially tax export income.

EU norms have been used to model Poland’s competition policies. Existing legislation prohibits monopolistic practices, including abuse of dominant market position, defined as market share exceeding 40%. Mergers are prohibited if they create or strengthen a firm’s dominant market position. Poland’s competition law does not yet contain corresponding EU regulations on state aid, and comprehensive information is unavailable. New legislation aimed at full conformity with EU requirements on competition and consumer protection is due to be introduced in 2000.

Poland was committed to introduce the provisions of the TRIPS Agreement by 2000, and under the Europe Agreement, to providing intellectual protection and enforcement similar to the EU. According to the authorities, Poland has had patent, trade mark and copyright legislation broadly consistent with international standards for some time, and has strengthened such protection by introducing new legislation, such as on copyright in 1999. A new industrial property law is also envisaged.

More effective enforcement of intellectual property rights remains a major challenge. The incidence of imported pirated and counterfeit products in Poland appears to be substantial. Strengthened legislative provisions over customs seizure of such goods is being introduced. Since 1999, Polish customs have been able to seize suspected goods without first requiring an application from the right holder. Parallel imports are not permitted.

Sectoral Developments

Agricultural assistance continues to be a high policy priority in Poland. Agricultural support almost doubled (on a PSE basis) from 12% in 1991-93 to 23% in 1997-99. The PSE further increased in 1999 to 25%, compared to pre-transformation levels in 1986-88 of 29%. This has assisted farmers, mainly at the expense of consumers, and has probably affected economic efficiency. Food prices, on average, were 27% above world levels in 1999. Income transfers from Polish consumers in 1999 amounted to Zl 10.6 billion and from taxpayers Zl 3.9 billion. Total transfers to farmers represented 2.4% of GDP.

Farm assistance is delivered by tariffs, price support, supply control measures, credit and input subsidies as well as direct outlays, including export subsidies and deficiency payments recently introduced on wheat. The main products assisted include cereals, especially wheat and rye, pigmeat, eggs, sugar, poultry, and oilseeds. The Agricultural Market Agency intervenes to provide market price support to selected commodities.

Poland has sectoral policies for certain manufactured products, such as transport equipment. Relatively high tariff assistance, including duty-free importation of component kits, was used to encourage motor vehicle assembly, and licensing arrangements were introduced in 1996 to encourage vehicle production.

Industry restructuring in Poland is continuing, facilitated by reduced manufacturing assistance and trade liberalization, especially allowing competition from EU exporters. Remarkable progress has been achieved in privatization of state-owned enterprises and in attracting foreign investment. Nevertheless, state-owned enterprises remain significant in some key sectors, such as hard-coal mining, steel, chemicals, shipbuilding, electricity generation, sugar, liquor, railway transport, and defence industries. The Government has accelerated privatization efforts since 1998, aimed at divesting 70% of remaining State assets by 2001. Priority areas for privatization include financial and telecommunication services, and key utilities, such as electricity.

The efficient provision of business services, including finance and telecommunications, are essential for private sector development. Poland is taking substantive steps to privatize the provision of such services and to de-regulate such markets. The (de facto) state monopoly on long-distance and local telephone calls was terminated from 1999, and for domestic telex and telegraphic services from 2000. The statutory monopoly on international calls and mobile satellite services is to end from 2003. The digital phone market is already open. Privatization of the national state-owned carrier, TPSA, began in 1998, and is intended to increase. New legislation and a regulatory regime are being established to control anti-competitive practices and to ensure interconnection for new licensed entrants and the provision of universal service.

Bank privatization has accelerated since 1997, aided by substantial foreign participation. Entry restrictions on foreign banks and insurance companies, including operation of branches, have been removed, subject to enhanced prudential requirements. No limits exist on the number of foreign licences issued.

Trade Policy and Foreign Trading Partners

Poland is an active participant in the WTO, of which it is a founding Member. Poland extends at least MFN treatment to all Members and almost all of its tariff is bound. Trade policy is grounded in WTO commitments and trade liberalization, in support of ongoing economic reform, is an important objective.

Accession to the EU remains in the forefront of Poland's economic and political goals. Indeed, much of the ongoing reform process is being driven by this objective. Under EU accession, Poland's industrial tariffs would decline substantially but agricultural assistance is likely to increase, perhaps raising questions about net trade creation.

Poland has a large and expanding network of preferential trade agreements, with the average tariff under such agreements considerably less than Poland's average applied MFN rate. Concerns that partners might have about this disparity – and its possible effects on domestic resource allocation – could be allayed by a certain multilateralization of preferences.

Vigorous pursuit of multilateral trade liberalization would benefit Poland’s long-term economic interests. Poland’s trading partners could also facilitate its successful transition by ensuring non-discriminatory access to their markets.

Government report Back to top

TRADE POLICY REVIEW BODY: POLAND
Report by the Government - Part III

AI. Trade policy regime
(1) Trade policy directions in the 1990S

1. Since the beginning of the 1990s Poland’s trade policy has been characterized by a broad process of regional and multilateral liberalization. In subsequent years Poland negotiated several free trade agreements with its trading partners and implemented the multilateral agreements of the Uruguay Round.

2. Foreign trade liberalization has become a key instrument for building a market economy system and integrating Poland’s economy into the world economy. A broad opening of Polish economy to the world economy has been an important component of the transformation package implemented since autumn 1989.

3. Import liberalization was considered as an important instrument to accelerate price reform, to encourage competition, reduce inflation and, by these means, to overcome the inefficiencies of central planning and ensure adequate market functioning. Increased competition resulting from import liberalization was also to speed up demonopolization, improve resource allocation, generate economies of scale, attract the FDI and thus to contribute to faster growth. It was also expected that import liberalization would stimulate the upgrading of the national economy technological level and, subsequently, enhance export potential.

4. The integration with the European Communities due to its economic, technological and political potential was to play the most important role. CEFTA agreement was motivated first of all by expected economic benefits related to trade liberalization and enhanced by close geographical position of the member countries. This Agreement was also necessary to avoid discrimination of mutual trade that would have resulted from bilateral free trade agreements of individual CEFTA countries with the EU. Other free trade agreements have constituted the elements of the adjustment process of Poland’s trade policy to the future adoption of EU common external relations.

5. Parallel to regional liberalization Poland actively participated in the Uruguay Round negotiations and submitted its own contributions. Since the entering into force of the WTO Poland has been vigorously implementing the Uruguay Round Agreements. The comprehensive rules on economic relations have created a benchmark for policy making in Poland, i.e. they have been playing the role of an external anchor for the systemic transformation in Poland.

(2) Regional agreements

6. The Europe Agreement on association with the European Communities was signed on 16 December 1991. It has provided for the gradual creation of free trade area in industrial trade, modest reduction of trade barriers in agricultural trade, progressive liberalization in trade in services and flow of capital, as well as the approximation of Polish laws to the EC acquis communautaire. Its commercial part entered into force on 1 March 1992 and other provisions on 1 February 1994. In 1993 free trade areas began to be created with CEFTA and EFTA countries on the basis of respective agreements.

7. In the next years new free trade agreements were negotiated with other partners (see Table 1). All of them are modeled after the trade part of the Europe Agreement and concentrate on the creation of free trade areas in industrial products and certain liberalization of agricultural trade.

8. By 1 January 1999, tariffs had been abolished on almost all industrial products imported from the EU (except mainly for cars; tariffs on these items are to be removed by 1 January 2002) and on the majority of industrial products coming from other countries - parties to free trade arrangements. Remaining tariffs will be eliminated under all free trade agreements by the beginning of 2002, at the latest.

Table 1 Back to top
Free trade agreements negotiated by Poland with its trading partners in the 1990s

(1) Dziennik Ustaw – Official Gazette of the Republic of Poland. Back to text

(3) Implementation ot the WTO agreements relating to trade in goods

9. Poland became a founding member of the WTO on 1 July 1995, however the first tariff cuts on industrial imports from WTO members were introduced on 1 January 1995. Tariff commitments on industrial products included binding of 96% of tariff lines (main exceptions being motor vehicles, oil and linen products) and an average reduction of tariffs level by 38%. Agricultural products were subject to tariffication, tariff binding and then reduction of tariffs by 36% over six years.

10. Most tariff reductions on industrial products entered into force in 3-5 annual stages, the last cuts on most sensitive items (including textiles) will become effective in 2001. Tariffs on agricultural products were reduced in 6 equal installments by the beginning of 2000.

11. Poland also participated in the Information Technology Agreement of 1997. Under this Agreement additional tariff cuts were implemented on computers, semiconductors, telecommunication equipment, software, etc.

(4) Trade policy instruments Back to top

(i) Tariffs
12. After the suspension of most tariffs in the first half of 1990 – aimed mainly at combating extremely high inflation – Poland introduced new customs tariff in August 1991. The then introduced customs duties – mostly unchanged – became the basis for tariff reductions negotiated later with many trading partners.

13. As a result of regional and multilateral liberalization the level of tariffs has decreased substantially. The average weighted tariff on all industrial imports amounted to 2.2% in 1999. About two thirds of industrial imports (imports from the EU and other countries covered by free trade agreements) have been duty free since the beginning of 1999. Thus, the average tariffs on remaining imports (from countries subject to MFN duty and from developing countries subject to GSP scheme) amounted to 5.5% (Table 2).

14. Tariffs on agricultural products remain higher than on industrial goods. The weighted average duty (including suspensions) on agricultural imports from the EU reached 18.1% in 1999, 11.6% on imports from CEFTA countries and 12.7% on other agricultural imports.

15. Poland offers GSP preferences to 45 developing countries (DEVs) with a lower GDP per capita than itself and to 49 countries considered as least-developed countries (LDCs). Tariff rates on imports from DEVs amount to 80% of the MFN level. Imports from LDCs are duty free. However, certain products considered as sensitive ones are excluded from the concession schemes for DEVs and LDCs, including some agricultural and textile products, cosmetics, cars.

16. The level of tariff protection, apart from preferences offered to trade partners, is also affected by duty suspensions and tariff quotas within which a reduced or zero per cent customs rate applies. Suspensions have been applied occasionally on agricultural products in shortage on domestic market and on certain industrial components and supplies in order to reduce the costs of manufacturing, e.g. on raw materials and parts for textile, leather, petrochemical, electronic and paper industries. Tariff quotas result from Poland’s WTO commitments (on agricultural products) or free-trade agreements (e.g. on motor vehicles), or are introduced autonomously for economic and social reasons (e.g. on pharmaceutical products, bunker fuel, gluten-free foodstuffs for children). With the general reduction of the level of import tariffs the number of autonomous suspensions and tariff quotas has been decreasing.

Table 2 Back to top
Average weighted import tariffs in Poland in 1999
(in %, according to the 1998 commodity pattern of imports)

Source: Calculations of the Ministry of Economy Back to top

17. In order to enjoy preferential access to the Polish market foreign exporter is required to present documents confirming the origin of the product from the country eligible for preferences. In the case of the European Union, EFTA, CEFTA, the Baltic countries and Turkey, the system of pan-European cumulation of rules of origin applies. The system facilitates the refund of customs duties on components originating in any of these countries and used in the production of export goods.